Inflation, exchange rates and flexible work shaping employee mobility, according to Mercer Cost of Living ranking

·10 min read
  • New York City (7) remains the most expensive city in the United States, with Hong Kong SAR (1) taking the top spot globally

  • Inflation, exchange rates, and the war in Ukraine has had a material impact on employees’ pay and savings

  • Mercer’s annual Cost of Living Survey provides a reference point and helps shape multinational organizations’ approach to calculating appropriate compensation packages for employees on international assignments

NEW YORK, June 29, 2022--(BUSINESS WIRE)--Today, Mercer announced the results of its 2022 Cost of Living Survey with New York City remaining the most expensive city in the US for expatriates, ranking 7th worldwide, while Hong Kong SAR took the top spot globally. In addition to cost of living data, employee mobility research conducted by Mercer and the learnings from Mercer’s work with clients demonstrates that the war in Ukraine, exchange rate variations and widespread inflation are shrinking employees’ pay and savings.

Both inflation and exchange rate fluctuations directly influence the purchasing power of expatriate employees. The rise of remote and flexible working has also caused many employees to reconsider their priorities, work-life balance and the choice of location to live in. These conditions have serious consequences for employers, who need to rethink their approach to managing a globally distributed workforce, particularly in light tight labor markets. According to a June 2022 survey by Mercer, labor shortages rank as a significant or moderate HR priority for 82% of US employers.

Mercer’s cost of living data helps employers understand the importance of monitoring currency fluctuations and assessing the inflationary and deflationary pressures on goods, services and accommodation in all operating locations. The data also help employers determine and maintain compensation packages for employees on international assignments and when working abroad.

"The volatility triggered by COVID-19 and further worsened by the crisis in Ukraine has fueled global economic and political uncertainty. This uncertainty, coupled with significant rising inflation in most of the countries around the world, has international assignees concerned about their purchasing power and socio-economic stability," said Yvonne Traber, Partner at Mercer and Global Head for the Mobility Business.

"Failing to adopt competitive international compensation strategies in times of uncertainty and adapt to this new world of work will undermine an organization’s ability to attract and retain top talent," added Traber.

Conversely, this situation also offers an opportunity for cities and governments looking to attract foreign business, and for businesses looking to attract talent. The cost of living in a location can have a significant impact on its attractiveness as a destination for talent, and it can influence site selection decisions for organizations expanding and transforming their geographic footprint.

"After years of low inflation, the US is now seeing price increases in goods and services at greater rates compared to many other countries. This inflation is also manifesting itself at different levels across cities and regions in the US," said Vince Cordova, Partner in Mercer’s Career practice. "Given the increased flexibility organizations and individuals have around work location options, understanding these differences and being able to measure how they change over time will be important in designing effective and responsive compensation and talent strategies."

Regional insights

The Americas
New York City (7) remains the most expensive city in the region, followed by Nassau, Bahamas (16). The remaining US cities are ranked between 17th place and 112th place, Los Angeles (17), San Francisco (19), Honolulu (20), Washington (29), Chicago (36) and Cleveland (112).

The most expensive Canadian city is Toronto (89) followed by Vancouver (108), Montreal (125), Ottawa (132), and least expensive city in Canada is Calgary (141).

In South America, Buenos Aires, Argentina (114) is ranked as the most expensive city in region, followed by Montevideo, Uruguay (123), Santiago, Chile (130), Quito, Ecuador (156), Sao Paulo, Brazil (168). Belo Horizonte (210) is the least expensive city in South America. Managua (212) the capital of Nicaragua is the least expensive city in the Americas.

Asia-Pacific
Four out of 10 most expensive cities to live in for the international assignees are located in Asia, including the single most expensive city in the world – Hong Kong SAR (ranked 1). Singapore (8), Tokyo, Japan (9) and Beijing, China (10) are all on the top 10. The most expensive city in India is Mumbai ranked 127.

The most expensive city in Pacific is Noumea, New Caledonia (54) closely followed by Sydney, Australia (58). Auckland, New Zealand (95) is the most expensive city in New Zealand, and Wellington (120) the least expensive in the Pacific.

Europe
Four European cities are among the top 10 list of most expensive locations. All of those four are based in Switzerland, and Zurich being ranked second within the global ranking, as being the costliest within the European cities, closely followed by Geneva (3rd) and Basel (4th). Other cities in Europe are Copenhagen, Denmark (11), London, United Kingdom (15), Vienna, Austria (21) and Amsterdam, The Netherlands (25).

The most expensive city in Eastern Europe is Prague (Czech Republic) ranked 60th out 227 cities. It is followed by Riga, Latvia (79), Bratislava, Slovakia (105) and Tallinn, Estonia (140). The least expensive city in Eastern Europe is Sarajevo in Bosnia-Herzegovina ranked 209th.

Middle East and Africa
Tel Aviv (Israel) is the costliest city in the Middle East for international employees, ranked on the sixth position within the global ranking. The next in line for this region are cities from the United Arab Emirates, namely Dubai (31) and Abu Dhabi (61). Saudi cities such as Riyadh (103) and Jeddah (111) rank in the middle, closely followed by Amman, Jordan (115) and Manama, Bahrain (117).

In Africa, Bangui (23), Libreville, Gabon (24) and Victoria, Seychelles (38) are the three costliest cities. High in the ranking for this region we find also Djibouti (41), Kinshasa (53) and Lagos (55). The cheapest city in Africa is Tunis, Tunisia ranked 220th.

About Mercer’s Cost of Living Survey
Mercer's widely recognized Cost of Living ranking is one of the world’s most comprehensive and is designed to help multinational companies and governments determine compensation strategies for their international assignees. New York City is used as the base city for all comparisons and currency movements are measured against the US dollar. The survey includes over 400+ cities throughout the world; this year’s ranking includes 227 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. The data collected provide all of the key elements employers need to design efficient and transparent compensation packages for international assignees. Learn more here.

About Mercer
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 83,000 colleagues and annual revenue of approximately $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.

Mercer 2022 Cost of Living Ranking

Rank

CITY

COUNTRY

1

HONG KONG

HONG KONG (SAR)

2

ZURICH

SWITZERLAND

3

GENEVA

SWITZERLAND

4

BASEL

SWITZERLAND

5

BERN

SWITZERLAND

6

TEL AVIV

ISRAEL

7

NEW YORK CITY, NY

UNITED STATES

8

SINGAPORE

SINGAPORE

9

TOKYO

JAPAN

10

BEIJING

CHINA

11

COPENHAGEN

DENMARK

12

SHANGHAI

CHINA

13

SHENZHEN

CHINA

14

SEOUL

SOUTH KOREA

15

LONDON

UNITED KINGDOM

16

NASSAU

BAHAMAS

17

LOS ANGELES, CA

UNITED STATES

18

GUANGZHOU

CHINA

19

SAN FRANCISCO, CA

UNITED STATES

20

HONOLULU, HI

UNITED STATES

21

VIENNA

AUSTRIA

22

QINGDAO

CHINA

23

BANGUI

CENTRAL AFRICAN REPUBLIC

24

LIBREVILLE

GABON

25

AMSTERDAM

NETHERLANDS

26

NANJING

CHINA

27

OSLO

NORWAY

28

TAIPEI

TAIWAN

29

WASHINGTON, DC

UNITED STATES

30

BOSTON, MA

UNITED STATES

31

DUBAI

UNITED ARAB EMIRATES

32

MIAMI, FL

UNITED STATES

33

MUNICH

GERMANY

34

BUSAN

SOUTH KOREA

35

PARIS

FRANCE

36

CHICAGO, IL

UNITED STATES

37

OSAKA

JAPAN

38

VICTORIA

SEYCHELLES

39

BRUSSELS

BELGIUM

40

SHENYANG

CHINA

41

DJIBOUTI

DJIBOUTI

42

ATLANTA, GA

UNITED STATES

43

HELSINKI

FINLAND

44

CHENGDU

CHINA

45

SEATTLE, WA

UNITED STATES

46

BERLIN

GERMANY

47

THE HAGUE

NETHERLANDS

48

MILAN

ITALY

49

DUBLIN

IRELAND

50

YOKOHAMA

JAPAN

51

NAGOYA

JAPAN

52

LUXEMBOURG

LUXEMBOURG

53

KINSHASA

THE DEMOCRATIC REPUBLIC OF THE CONGO

54

NOUMEA

NEW CALEDONIA

55

LAGOS

NIGERIA

56

CHONGQING

CHINA

57

ROME

ITALY

58

SYDNEY

AUSTRALIA

59

HAMBURG

GERMANY

60

PRAGUE

CZECH REPUBLIC

61

ABU DHABI

UNITED ARAB EMIRATES

62

FRANKFURT

GERMANY

63

XIAN

CHINA

64

LUANDA

ANGOLA

65

DAKAR

SENEGAL

66

EDINBURGH

UNITED KINGDOM

67

MELBOURNE

AUSTRALIA

68

ABIDJAN

CÔTE D'IVOIRE

69

SUZHOU

CHINA

70

PHILADELPHIA, PA

UNITED STATES

71

STUTTGART

GERMANY

72

SAN JUAN

PUERTO RICO

73

WUHAN

CHINA

74

BRAZZAVILLE

THE REPUBLIC OF CONGO

75

DALLAS, TX

UNITED STATES

76

CONAKRY

GUINEA REPUBLIC

77

DOUALA

CAMEROON

78

BARCELONA

SPAIN

79

RIGA

LATVIA

80

N'DJAMENA

CHAD

81

DUSSELDORF

GERMANY

82

PITTSBURGH, PA

UNITED STATES

83

MINNEAPOLIS, MN

UNITED STATES

84

BRISBANE

AUSTRALIA

85

HOUSTON, TX

UNITED STATES

86

GLASGOW

UNITED KINGDOM

87

STOCKHOLM

SWEDEN

88

POINTE-A-PITRE

GUADELOUPE (FRANCE)

89

TORONTO

CANADA

90

MADRID

SPAIN

91

PORTLAND, OR

UNITED STATES

92

TAICHUNG

TAIWAN

93

ABERDEEN

UNITED KINGDOM

94

BIRMINGHAM

UNITED KINGDOM

95

AUCKLAND

NEW ZEALAND

96

LYON

FRANCE

97

PERTH

AUSTRALIA

98

DHAKA

BANGLADESH

99

LEIPZIG

GERMANY

100

YAOUNDE

CAMEROON

101

ST. LOUIS, MO

UNITED STATES

102

ADELAIDE

AUSTRALIA

103

RIYADH

SAUDI ARABIA

104

CANBERRA

AUSTRALIA

105

BRATISLAVA

SLOVAKIA

106

BANGKOK

THAILAND

107

DETROIT, MI

UNITED STATES

108

VANCOUVER

CANADA

109

LISBON

PORTUGAL

110

TOULOUSE

FRANCE

111

JEDDAH

SAUDI ARABIA

112

CLEVELAND, OH

UNITED STATES

113

KAOHSIUNG

TAIWAN

114

BUENOS AIRES

ARGENTINA

115

AMMAN

JORDAN

116

NUREMBERG

GERMANY

117

MANAMA

BAHRAIN

118

BAMAKO

MALI

119

MUSCAT

OMAN

120

WELLINGTON

NEW ZEALAND

121

BELFAST

UNITED KINGDOM

122

MANILA

PHILIPPINES

123

MONTEVIDEO

URUGUAY

124

LOME

TOGO

125

MONTREAL

CANADA

126

ATHENS

GREECE

127

MUMBAI

INDIA

128

COTONOU

BENIN

129

HARARE

ZIMBABWE

130

SANTIAGO

CHILE

131

KUWAIT CITY

KUWAIT

132

OTTAWA

CANADA

133

DOHA

QATAR

134

PHNOM PENH

CAMBODIA

135

PORT OF SPAIN

TRINIDAD & TOBAGO

136

GUATEMALA CITY

GUATEMALA

137

OUAGADOUGOU

BURKINA FASO

138

NIAMEY

NIGER

139

SAN JOSE

COSTA RICA

140

TALLINN

ESTONIA

141

CALGARY

CANADA

142

HAVANA

CUBA

143

CASABLANCA

MOROCCO

144

BUJUMBURA

BURUNDI

145

LJUBLJANA

SLOVENIA

146

ACCRA

GHANA

147

ABUJA

NIGERIA

148

VILNIUS

LITHUANIA

149

MEXICO CITY

MEXICO

150

HANOI

VIETNAM

151

JAKARTA

INDONESIA

152

PANAMA CITY

PANAMA

153

KINGSTON

JAMAICA

154

CAIRO

EGYPT

155

NEW DELHI

INDIA

156

QUITO

ECUADOR

157

VIENTIANE

LAO PEOPLE'S DEMOCRATIC REPUBLIC

158

BUCHAREST

ROMANIA

159

ZAGREB

CROATIA

160

NAIROBI

KENYA

161

TIRANA

ALBANIA

162

RABAT

MOROCCO

163

HO CHI MINH CITY

VIETNAM

164

DAR ES SALAAM

TANZANIA

165

LIMASSOL

CYPRUS

166

KAMPALA

UGANDA

167

MAPUTO

MOZAMBIQUE

168

SAO PAULO

BRAZIL

169

NOUAKCHOTT

MAURITANIA

170

SOFIA

BULGARIA

171

PORT-AU-PRINCE

HAITI

172

LIMA

PERU

173

SANTO DOMINGO

DOMINICAN REPUBLIC

174

WARSAW

POLAND

175

BELGRADE

SERBIA

176

RIO DE JANEIRO

BRAZIL

177

CHENNAI

INDIA

178

BENGALURU

INDIA

179

BANDAR SERI BEGAWAN

BRUNEI

180

BUDAPEST

HUNGARY

181

KUALA LUMPUR

MALAYSIA

182

SAN SALVADOR

EL SALVADOR

183

COLOMBO

SRI LANKA

184

BLANTYRE

MALAWI

185

MONTERREY

MEXICO

186

BAKU

AZERBAIJAN

187

WROCLAW

POLAND

188

ANTANANARIVO

MADAGASCAR

189

TEGUCIGALPA

HONDURAS

190

KRAKOW

POLAND

191

PORT LOUIS

MAURITIUS

192

HYDERABAD

INDIA

193

JOHANNESBURG

SOUTH AFRICA

194

CAPE TOWN

SOUTH AFRICA

195

ASUNCION

PARAGUAY

196

LA PAZ

BOLIVIA

197

YEREVAN

ARMENIA

198

YANGON

MYANMAR

199

LUSAKA

ZAMBIA

200

BRASILIA

BRAZIL

201

PUNE

INDIA

202

BANJUL

GAMBIA

203

KOLKATA

INDIA

204

MINSK

BELARUS

205

BOGOTA

COLOMBIA

206

SKOPJE

MACEDONIA

207

MANAUS

BRAZIL

208

KIGALI

RWANDA

209

SARAJEVO

BOSNIA-HERZEGOVINA

210

BELO HORIZONTE

BRAZIL

211

JOHOR BAHRU

MALAYSIA

212

MANAGUA

NICARAGUA

213

WINDHOEK

NAMIBIA

214

ADDIS ABABA

ETHIOPIA

215

GABORONE

BOTSWANA

216

DURBAN

SOUTH AFRICA

217

TBILISI

GEORGIA

218

ALGIERS

ALGERIA

219

ALMATY

KAZAKHSTAN

220

TUNIS

TUNISIA

221

TASHKENT

UZBEKISTAN

222

ISTANBUL

TÜRKIYE

223

KARACHI

PAKISTAN

224

ISLAMABAD

PAKISTAN

225

DUSHANBE

TAJIKISTAN

226

BISHKEK

KYRGYZSTAN

227

ANKARA

TÜRKIYE

View source version on businesswire.com: https://www.businesswire.com/news/home/20220628006171/en/

Contacts

Cassie Lenski
+1 469-841-8999
Cassie.lenski@mercer.com

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